The recent decision in Fung Wing Yee (a minor) v. Chen Jung
Chien demonstrates how the Court applies the new rules on
sanctioned offer and awards enhanced costs and interests to the
Plaintiff, who had done better at trial than her sanctioned offer
to the Defendant.
The case arises from a traffic accident in which the minor
Plaintiff sustained serious injuries. Liability was admitted and
damages was assessed at HK$2,216,396.85 by the Court.
After Judgment was handed down, the Plaintiff applied for a
variation of the costs order nisi in two-fold:
costs to be taxed on common fund basis, on the basis that the
Plaintiff was a minor; and
enhanced costs and interests under Order 22 rule 24, on the
basis that the Plaintiff had done better than her sanctioned offer
of HK$1.9 million (excluding interests) plus costs, which was made
more than a month before the assessment hearing and was met with no
response from the Defendant.
The Court refused the first limb of the application, as it found
no special or unusual feature of the case nor any doubt as to the
adequacy of the damages awarded that would warrant costs to be
taxed on a common fund basis. The fact that the Plaintiff was a
minor suing by her next friend did not per se justify the
exercise of the Court's discretion to order common fund
On the application for enhanced costs and interest, the
Defendant objected to the same on the grounds that it would be
unjust, stating that there was delay in responding to the
sanctioned offer as they had to take instructions from both the MIB
and the provisional liquidators of Anglo-Starlight (the original
insurer). It also argued that certain documents such as the
supplemental witness statement and supplemental list of documents
of the plaintiff were only disclosed after the sanctioned offer was
made. Thirdly, to make the orders sought would deplete the MIB
fund, which would not be in public interest.
The Court rejected all three arguments by the Defendant, as it
considered that the Defendant was open to accept the sanctioned
offer even after the stipulated period, and the subsequent, lower
sanctioned offer made by the Defendant for HK$1.1 million showed
that they were not minded to accept the sanctioned offer of the
Plaintiff all along. Secondly, the documents served after the
Plaintiff's sanctioned offer did not affect the decision making
process of the Defendant. Thirdly, there was no rule to suggest
that where MIB is involved as a party, different rules should
The Court therefore varied the cost order nisi and awarded
interest at 2% above the judgment rate for all special damages and
PSLA from the last date of acceptance of the sanctioned offer
without leave of Court to the date of judgment. The Plaintiff's
costs incurred after the last date of acceptance are taxed on
indemnity basis, with interest on those costs at 2% above judgment
In addition, the Court held that had the Plaintiff applied for
the second limb only, it would have ordered enhanced costs
including indemnity basis to also apply to the costs of the
The case provides useful insight into what the Court would
regard as relevant considerations in deciding whether the award of
enhanced interest and costs on indemnity basis would be unjust to
the losing party.
Parties to a proceeding and insurers are reminded to consider
any sanctioned offers made by the other side carefully to avoid
Copyright 2010. JSM, Mayer Brown International LLP
and/or Mayer Brown LLP. All rights reserved. Mayer Brown is a
global legal services organization comprising legal practices that
are separate entities ("Mayer Brown Practices"). The
Mayer Brown Practices are: JSM, a Hong Kong partnership, and its
associated entities in Asia; Mayer Brown International LLP, a
limited liability partnership incorporated in England and Wales;
and Mayer Brown LLP, a limited liability partnership established in
the United States. The Mayer Brown Practices are known as Mayer
Brown JSM in Asia.
This article provides information and comments on legal
issues and developments of interest. The foregoing is not a
comprehensive treatment of the subject matter covered and is not
intended to provide legal advice. Readers should seek specific
legal advice before taking any action with respect to the matters
discussed herein. Please also read the JSM legal publications Disclaimer.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Contractors and principals should ensure they have appropriate insurance coverage instead of relying on indemnity clauses.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).